Monday, April 23, 2007

Locking Up Alex Ovechkin

For Caps GM George McPhee, the term "off-season" is something of a misnomer, as he certainly isn't going to be getting much (if any) of a break this summer.

What's on GMGM's agenda? Well, there's the Entry Draft in late June, for which the Caps have the #5 overall pick (and it has been speculated that the Caps will be busy in advance of that date, quite possibly moving that pick and/or a player or two for proven NHL talent).

There are restricted free agents to re-sign (or cut loose), including Brian Sutherby, Brooks Laich, Tomas Fleischmann, Milan Jurcina and Steve Eminger.

And there are, of course, unrestricted free agents to wine, dine and (hopefully) sign.

But there's something else in play that's probably been on GMGM's mind since August, 2005 - negotiating a contract extension with franchise winger Alex Ovechkin. Ovechkin, who is under contract for next season but will become a restricted free agent thereafter if no extension can be reached, is eligible to receive an extension any time after July 1.

Will re-signing AO be on GMGM's summer "to do" list? I have no idea. But I'm sure the Caps' front office has a pretty good idea what they're willing to commit to to keep their superstar in D.C. To begin with, no player can make more than 20% of his team's total payroll (which, assuming the salary cap increases to$48 million for next year and stays there for the first year of the extension, would be a maximum of $9.6 million - the Caps will not be at $48 million in salary and Alex will not be re-signed at $9.6 million per year).

Ideally, GMGM et. al. would be able to sit back and watch Pittsburgh sign Sidney Crosby to an extension and use that as their point of comparison. Short of that, this summer's free agent market might give some clues (Thomas Vanek, for example, is an RFA 40-goal scorer), but there aren't any Ovechkins out there. My W.A.G. is that Alex will be in the $7 million/year range (a bit more than Ilya Kovlachuk signed for in October of '05 and around what Jarome Iginla signed for a couple of months earlier after leading his Flames to the Finals).

But how much money can the team really give the kid? How much would you give him? Remember, they're going free agent shopping this summer (and still have to sign Nickläs Backström), and they have Ovechkin, Alex Semin, Mike Green and Shaone Morrisonn as RFAs and Olie Kolzig and Chris Clark as UFAs next summer. It becomes pretty clear that the number of years - moreso than the number of dollars - may become the focus of negotiations. After all, there's no cap on the duration of contracts, is there, Rick DiPietro?

So whether or not AO's contract negotiations start this summer, it's undoubtedly weighing on GMGM's mind, and impacting every move the team makes. With an already-full plate in front of him, McPhee is going to have a very busy summer indeed.

11 comments:

FAUXRUMORS said...

1) We agree that a GM's work basically starts with the end of the season. It can be argued that they do most of what they are paid for from June 1st to August 1st; draft/free agents,etc.
2) We believe the # 1 thing GMGM needs to do this summer is to get Backstrom to commit to coming to D.C.
3) Getting AO to sign 'early,' before his Free agency status next year would be smart, if its even possible.
4) Isn't AO's agent his parents? If they were smart they'd wait until next summer. You are correct in your assessment that AO would be worth the Cap max. probably 9+ mil/year.
5) If the Caps are unwilling/unable to pay it, we're sure several other teams would step forward. If GMGM can convince AO/his parents to accept a long term deal at 7 mil/year now then McPhee has earned an extension of his own; saving Ted millions!

borr4 said...

There's no way Alex signs for $7 million for the simple reason that teams like Toronto or the Rangers would easily offer him something in the $9 million category. If the Caps want Alex to sign long term, they're going to have to go to the max or very close to it.

JP said...

None of the other 29 teams will offer Alex $9m per year as a restricted free agent. If they did (and Alex signed with that team) that team would owe the Caps four first round picks and be paying AO $9m per year - that's simply way too expensive for any sane GM to consider.

Unrestricted free agency is another story, but I really can't see the Caps having much competition signing Alex as an RFA.

The Peerless said...

There are two distinct numbers here -- salary and cap hit. Not every $46.9 million/7 year deal is the same. Whatever Crosby might sign for, the "floor" here is the Datsyuk deal. There are then these issues:

1) Term. I would think the Ovechkin camp would resist anything more than a five year deal (to coincide with his UFA status at age 27 -- he won't have the age, but he'll have seven accrued seasons as of 6/30 of 2012).

2) Salary. Datsyuk's deal provides a constant $6.9 million/year for seven years. His salary equals the cap hit. With Ovechkin, the club might offer an escalator. Say, start at $6 million/yer and escalate the value over the life of the deal, say, a million a year. The total value is $40.0 over five years; Ovechkin gets $6.0 million in his first year, but the cap hit is $8.0 to the Caps. But it won't matter, since the Caps aren't going to be near the cap in 2007-2008, anyway, in all likelihood.

3) Risk. If the contract is back-loaded, the club is assuming several layers of risk -- that the player will be healthy in years four and five (when the outlay is greater than the cap hit), that the club will see at least proportionate increases in revenue to justify back-loading, that the cap increases past the contract "mid point" (year three) where the cap hit and salary are equal. Otherwise, it would be difficult to fit talent under the cap in the later years of the deal.

The wild card is the anticipation of whatever offer sheet might be tendered to Ovechkin if he reaches RFA status. Unfortunately for the NHL, the new economic order has cleared out some of the big spenders...but not all of them. It only takes one club (insane though they might be) to tender a max-bid offer.

FAUXRUMORS said...

1) Couldn't disagree more with you JP. About 25 or so NHL GM's would be very happy to lose 4 first rounders for a chance to sign a franchise player like AO at age 22!
2) Its not like paying big bucks for a 30+ guy. 1st rounders are thrown around like nothing these days for a playoff rental. Who cares if you lose 4 for a super star! 3) With the cap going up, more and more teams will have more cap room to spend, and it won't take much convincing to have a GM sign an immeadiate fan draw like AO. Its a total no-brainer

FAUXRUMORS said...

1) BTW the Rangers would be VERY happy to give up 4 1st rounders for AO. They have plenty of cap space. Afterall the Caps are paying 1/2 of JJ salary anyway
2) All that speculation is moot though. No way Ted will allow his only marketable star (sorry, people don't come to see a goalie)This is why the speculation that AO will sign for less now would be a coup for the Caps, but a bad business decison for Ovechkin to make
3) Even read a story today about this subject with respect to Crosby: http://www.pittsburghlive.com/x/pittsburghtrib/sports/penguins/s_503998.html Along the lines of AO, think any GM would worry about losing 4 draft picks to get a 20 year old Crosby?

JP said...

Great get on that Crosby article, Faux. How'd you find it? Click the link in the post you're commenting on?

And the Rangers don't have a ton of cap room after next year, especially having to sign Lundqvist this summer.

I think you'll be surprised at how few RFA contracts are offered. There's an unspoken gentleman's agreement in place on the matter (and apparently Bobby Clarke is no gentleman).

But I do agree with you that it will be a moot point with regards to Sid and Alex.

FAUXRUMORS said...

1) Thanks.
2) How you can say the rangers(or any team for that matter) won't have cap room in 2 years is astounding.Right now they have exactly 3 players signed for that distant year and Jagr's salary only counts for 1/2(Thanks to Ted generosity)
3) Even if Lundqvist gets a hefty raise to about 5 mil/year, that'll still leave more than enough dough to try to land a big name RFA
4) If the cap continues to rise, it'll he in the 50 mil range by then. Plenty of space to fit in 10 or so for AO/Cindy or another big name. Forcing the caps/Pens to make some big/expensive decisions.

Rage said...

Not to say that Faux isn't infallible, but isn't Jagr's salary $11? And isn't Ted only covering $4? And isn't 4/11 < 1/2?

Just curious.

JP said...

For 2008-09, the Rangers have the following cap commitments already:

Jaromir Jagr - $4.94m (his salary is $8.36m, with the Caps paying the difference)
Matt Cullen - $2.875m
Lauri Korpikoski - $1,017,533.33
Michael Sauer - $875,000
Marc Staal - $855,000
Alex Bourret - $850,000
Brandon Dubinsky - $633,333.33
Dane Byers - $608,333.33
Ryan Callahan - $575,000
Blair Betts - $615,000

Those commitments aren't huge, but it's more than three players and very little NHL-caliber fillers. There is no room for a $10m Alex or Sid there if they want a chance at competing.

Anonymous said...

the answer is quite simple and obvious, as much as it takes to keep him in a caps sweater the rest of his career